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Post 0

Friday, June 19 - 11:27amSanction this postReply
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I'm fixed on one sentence:

"Now there is and should be nothing illegal about what the repairer did, anymore than there is or ought to be anything illegal when people fail to keep their promises."

Enforcing promises is what contract law is all about. So okay. The free market isn't all rainbows and fairies. But it does let you sue the obnoxious TV repair guy if you want to. :-)

Jordan





Post 1

Friday, June 19 - 12:46pmSanction this postReply
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Jordan -- it was an oral promise to * try * and be there by a certain time, not a written contract with specified penalties for non-compliance.

And, given the cost of hiring legal counsel to recover costs to the customer that are considerably less than the costs of a legal battle, common sense should tell you to just let it drop, and pursue non-legal remedies: namely, never try to hire this person again, and use word of mouth to discourage your friends from attempting to hire this person, either.

Anyone with business practices like this seems unlikely to stay in business very long.

I had a washing machine break down recently. The person I called to fix it showed up on time, did a good job, and charged a reasonable price. Soon after the drier failed too. Guess who I called to fix it?





Post 2

Friday, June 19 - 1:42pmSanction this postReply
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Heh. Never said he'd win, Jim.

Jordan



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Post 3

Friday, June 19 - 2:19pmSanction this postReply
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Contract law covers oral agreements. Small claims court would be an appropriate venue for things like rude and irresponsible trade people that don't keep their word, but only if one was sufficiently upset to waste time that way when it would clearly be better just to move on. (EDIT: I was wrong here about the small claims court because, as Tibor points out, no consideration was given - it is a broken promise and not a contract. Steve)

But this problem is common in today's society. The consumer is an amateur doing business with an experienced professional - a part-timer working with someone in the field full-time. An individual dealing with an organization. There is an imbalance of power. The more the organization is government-like (think utility companies, for example) the less responsive they are.

For example, when we rent or lease an apartment or house, or a car or when we buy a car from from a dealer, or when we borrow money, or many other financial arrangements... we always end up having to sign a contract that the vendor wrote. Sometimes we can haggle over a few variables, but not many. Not just the contract wording, but the structure of the organization, the processes and procedures that encompass the transactions - business traditions dictate to us. Too often it is like when we have to click "Accept" or "Cancel" on the terms for software downloaded on the computer.

The more freedom in a system, the more responsive the vendor will be to competitive forces and the desire to have a good reputation with the consumer. Also, the smarter, more flexible and the more knowledgeable the consumer is, the less the power imbalance is a problem.

But even in a fairly free area of the market, and even with savvy, experienced consumers there is still an annoying problem. The good thing about Capitalism is that every problem can be thought of as a form of demand.

I can envision a service arising for each of these situations that does the contract for the consumer. A service that by acting as the consumer's agent, for many, many subscribing consumers, gets better prices and better terms. AND, as regards this article, would permit the consumers to complain to their contracting service which would get them some form of reimbursement (try to make things better at the expense of the vendor) or else never use that vendor and post the name of the offending vendor in a public place accessed by interested consumers. Real Estate agents serve this function to a degree, as do professional managers or agents in the world of writers, artists, entertainers, and actors.

The free market is not utopia and it can't satisfy all needs, but for things that are within its context, it does move in the direction of perfection - but as just part of the requirements of on-going, unrelenting improvement.

A last thought: Sometimes the best way to finish off a transaction that is less then optimal is more an act of psychology than an attempt to squeeze justice out of a frustrating situation. Branden told a story about Alan Greenspan coming by his apartment. They were going somewhere. Branden said he was just about ready to go, he just had to check on the bundle the laundry had dropped off - count the items to see if everything came back. Greenspan watched him counting socks and underwear and asked, "Have they lost many items over the years?" Branden says no and Greenspan says, "Then it would be cheaper to absorb the loss of an occasion pair of socks, then to hassle with counting and putting in a claim." Life presents us with choices. Economics is about the choices we make in the outside world. Psychology is about the choices we make in the inside world. Attaining a good life requires us to work them both efficiently.

(EDIT: I made a correction to the first paragraph after reading what Tibor posted later.)
(Edited by Steve Wolfer on 6/20, 11:53am)




Post 4

Friday, June 19 - 2:28pmSanction this postReply
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The free market is not utopia and it can't satisfy all needs, but for things that are within its context, it does move in the direction of perfection - but as just part of the requirements of on-going, unrelenting improvement.
.................

And, it must be remembered, perfection is CONTEXTUAL...



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Post 5

Saturday, June 20 - 5:48amSanction this postReply
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A promise is not enforced, a contract is. If I promise someone to meet them for lunch and don't show, this isn't legally actionable. If I merely shake a hand on a deal for someone to build me a swimming pool and the deal goes awry, I have no legal recourse.



Post 6

Saturday, June 20 - 9:37amSanction this postReply
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Promises under contracts are what we enforce. A contract is basically an enforceable promise.

Nitpicking,
Jordan



Post 7

Saturday, June 20 - 11:03amSanction this postReply
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Steve -- Sanctioned post #3.

One last thing -- a valid contract has consideration on both sides. Both sides must offer to exchange something of some value in exchange -- in consideration -- of receiving what the other party offered in trade.

In the case under consideration (sorry about the wordplay), the repair person is arguably offering to come by and negotiate a contract -- "I'll look at what needs to be repaired, and then tell you what I think needs to be done and give you an estimate of what it will cost, and then you'll decide whether to accept this offer". If something like that is what they said or implied, then there isn't a contract yet, because you haven't offered them consideration.

Now, if they had told you that they wouldn't come out to your house unless you agreed to an upfront service call fee -- say, $90 -- and they got your credit card number, and said that if they drove out to your house and you had changed your mind about them giving you an estimate they would charge you the $90 anyway -- then you would have offered them consideration for the service of coming out to your house to give an estimate, and you'd have a valid oral contract to enforce.

It still arguably wouldn't be worth the hassle to pursue that claim in small claims court, though, unless you place a really low value on your time.



Post 8

Saturday, June 20 - 11:15amSanction this postReply
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No consideration had been involved apart from commitment of time and opportunity cost. These are involved in nearly all broken promises. That is part of why they are a moral lapse but not legally actionable (no one has been hired to guard against their breach). (This is not put forth as an account of current contract law.)



Post 9

Saturday, June 20 - 12:03pmSanction this postReply
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Thanks, Jim.

I corrected the error in my post... which I wrote too quickly, without running through the elements of a contract.

Tibor, where you shake hands with the contractor on a deal to put in a swimming pool, I don't understand why you would have no legal recourse. I agree it's better to have something in writing... but unless the law has changed, or is different in your state, a contract (except those involving the transfer of real estate and a few other exceptions that have been put in as consumer protection) don't have to be in writing. Are you saying you would have a hard time proving the elements in court, or that it would not have been a contract to start with?



Post 10

Saturday, June 20 - 12:50pmSanction this postReply
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Jim, yep, consideration is indeed essential to an enforceable contract. Lack of consideration suggests that the parties did not intend to be bound by a promise.

Tibor, time and opportunity costs *can* count as consideration, if not actual then substituted under a theory of promissory estoppel.

Jordan





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Post 11

Saturday, June 20 - 7:53pmSanction this postReply
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I am saying that since neither party has made provisions to secure the promise by getting someone or a court or a security firm protected it against breach, it isn't so protected. One cannot assume that there will be some free of charge agency providing that protection. It's a costly thing. And a mere handshake that does not involve hiring the protection gets exactly what it pays for, namely, nothing.
(Edited by Machan on 6/21, 2:47am)




Post 12

Monday, June 22 - 9:06pmSanction this postReply
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Excellent essay Dr. Machan. I think "hand-shake" agreements and verbal agreements are, and should be, non-actionable. Besides being unprovable (your word against another), they are based on one person's judgment of a another persons character. Your insurance in these instances is your best judgment. Your payment in the case of loss is experience. Of course, if a guy agrees to paint your house and comes over and steals your ladder instead, that's actionable.



Post 13

Monday, June 22 - 10:36pmSanction this postReply
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Verbal and "handshake" agreements -- except under a handful of specific circumstances (See the Statute of Frauds) -- are just as actionable as written agreements although they might not be worthwhile to enforce.

Jordan



Post 14

Tuesday, June 23 - 12:12amSanction this postReply
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Jordon,

Would you agree that substituting government coercion for individuals simply taking responsibility for the outcomes of their decisions in minor affairs is a net negative in the affairs of men? Regardless of the employment opportunities for lawyers built into the law presently.



Post 15

Tuesday, June 23 - 12:41amSanction this postReply
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Mike,

If two people make a valid contract but one can violate it without consequence where is the justice? If someone agrees to put in a patio at my house, accepts money for the supplies, then tells me he had an emergency come up and he had to use the money for something else, that is the same as theft or fraud if it is treated as not actionable just because no paper was involved. That isn't an issue of government coercion - it is protecting individual rights and assigning responsibility. There are plenty of areas of the law where lawyers have run amuck and should be reined in, but this isn't one of them.



Post 16

Tuesday, June 23 - 8:28amSanction this postReply
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By "this" do you mean Tibor's example?

If every example of mistaken judgment becomes a "rights" issue rights become meaningless.

Tibor is exactly right in that perfection will never exist in human interactions. Sometimes I think otherwise sane people still have a god image operating in their heads where every tiny little error in life can be made right. He "sees the turn of every sparrows wing" etc. Can you see that this misapprehension can cause the poor judgment in the first place? That relying on your own judgment and accepting the consequences improves your judgment, makes you a better, stronger person? That involving third persons, with their own self interests and bias' and faults only makes the situation worse? That's my take and why I liked Tibor's essay very much.



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Post 17

Tuesday, June 23 - 9:42amSanction this postReply
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The larger issue is whether legal services come free of charge, without having secured them. Now in classical liberal, libertarian, Objectivist political economy people need to establish ("institute") government before government has any authority over them. (The idea of the consent of the governed arises here.) So prior to contract, there would be promises without the benefit of enforcing them. Once a government or legal service is instituted or established--via a compact, not a contract(!)--then if agreements are serious and involve consideration, those party to them need to get them recorded and pay the requisite fee-for-service or something equivalent so they can be backed by legitimate force in case they are breached.
Now this is not how the law reads, as far as I know, although it is close. If an agreement is public enough so that it can be proven to have taken place and the stakes are high, they are enforceable but I am not even sure they ought to be even then. As the saying goes, an unwritten contract is or ought to be worth exactly the paper is that it isn't written on. But as a matter of morality, they freely bind one to performance "as promised." (One reason a cohabitation needs to go on for a long time before it becomes a common law marriage seems to have to do with this point.)



Post 18

Tuesday, June 23 - 10:44amSanction this postReply
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Mike,

You asked, "By "this" do you mean Tibor's example?"

No, I was referring to the example I gave in the preceding sentence: "If someone agrees to put in a patio at my house, accepts money for the supplies, then tells me he had an emergency come up and he had to use the money for something else..."

You said, "Sometimes I think otherwise sane people still have a god image operating in their heads where every tiny little error in life can be made right." I agree. Lots of people develop a psychological habit of displacing blame for any deficiency in their life (real or imagined) onto some lack of perfection. Instead of a practical focus on 'What needs doing?" they act as if the outside world, others, need to change and then everything will be okay. As if the absence of perfection in politics, the morals of others, etc., etc., were the reason for their problems.

But even though that is a common, and self-defeating, approach to life, it doesn't change the value of moving our system closer to where it holds people responsible. A reasonable approach to life is to use written contracts, don't deal with people whose reliability might be in question, and don't turn small injustices into crusades. But that is separate from the decisions regarding the laws, and the principles they are founded on. The first is psychological and tells us how to steer our path through our environment, the second is about needed change in the systems that are an important part of the environment we live in.



Post 19

Tuesday, June 23 - 11:24amSanction this postReply
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Tibor,

You said, "The larger issue is whether legal services come free of charge..." Objectivists and Libertarians know that there are no free services in the literal sense. Traditionally they have been paid for with a combination of taxes and the collection of court costs from the loser. Those two can be structured in different ways - some more equitable than others. I like the concept of registering a contract for a fee.
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As to the enforcement of promises, I'd guess that man has always attempted to reduce the risks of broken promises and that prior to government (or under a government that was no help in this area) people worked out arrangements of some sort. Take a look at loan sharks, or securing a promise by possession of collateral - simple possession works for a pawn shop. What we have with reasonably good government and the carefully worked out understanding of the elements of a contract is a difference in the degree of enforceability - which in turn permits and encourages more transactions, less risk, more economic options, and a more energetic economy.
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You said, "Once a government... is instituted... then... [people] need to get them recorded and pay the requisite fee-for-service... so they can be backed by legitimate force in case they are breached." I agree that is a more just form of payment for the service than taxes, and it would be more efficient since, presumably, many of the unenforceable situations would not lend themselves to registration and would get corrected when the agreement was being contemplated. But even if a different system for payment of court costs exists, it doesn't mean that legitimate force can't be brought to bear on a breach of a legitimate, enforceable contract. This seems to be mixing the questions of what is the best way to pay for civil court cases involving contracts and what is an equitable court outcome for a breached, enforceable contract.
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You said, "If an agreement is public enough so that it can be proven to have taken place and the stakes are high, they are enforceable but I am not even sure they ought to be even then."

We disagree here. I believe that contracts that can be enforced, should be enforced if the injured party sues. I would agree that there are problems with the system that allow tort lawyers to make a business out of twisting the law, and that needs to stop, and I agree that the way that court costs are paid needs to change to be equitable. But if someone wants to sue for a small amount (a matter of principle) and they are willing to pay any court costs that exceeds what they are awarded, and to pay all court costs if they loose, then they should be able to proceed. That adds justice to our environment.





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